Ecuador to Sign 30-Year Contract with Ivanhoe for Pungarayacu Field


Ecuador, South America
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QUITO (Dow Jones Newswires), October 8, 2008

Ecuador state oil company Petroecuador and Ivanhoe Energy Ecuador, the local unit of Canada's Ivanhoe Energy Inc., on Wednesday will sign a 30-year service contract to develop the Pungarayacu oil field, a Petroecuador official told Dow Jones Newswires.

Camilo Delgado, a vice president of Petroecuador's Petroproduccion unit, said Ivanhoe company will make all the investments the field needs.

"The investment for the period is estimated at around $13 billion," Delgado said.

Pungarayacu is located in the Amazonas region.

In the first stage of around a year, the company will invest $100 million for evaluating the field. In the second stage, the company will invest around $500 million.

According to project plans, the oil production will begin with 30,000 barrels per day and could rise to 120,000 barrels per day.

The Pungarayacu's crude oil has between 8 and 9 degrees gravity on the API scale. Ivanhoe has special technology called HTL-Heavy to Light to transform the heavy crude into somewhat lighter grades of around 23 degrees gravity API.

According Delgado, Petroecuador will pay Ivanhoe around $37 per barrel when production begins. He added that the price will be adjusted each quarter according factors included in the contract.

Copyright (c) 2008 Dow Jones & Company, Inc.

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